September 2, 2024
New Delhi, India
Currency Market Analysis
USDINR
The Rupee strengthened, tracking gains in Asian peers and expectations of MSCI-related inflows. Fitch Ratings affirmed India’s long-term ‘BBB-‘ rating with a stable outlook. Federal Reserve Chair Jerome Powell indicated that further labor market cooling would be unwelcome, though the Fed is ready to cut rates in September.
EURINR
The Euro dipped as lower inflation increased the chances of a European Central Bank (ECB) rate cut. Despite cautious signals from ECB officials, markets are pricing in around 65 basis points of rate cuts by year-end. Lending to Eurozone companies slowed slightly in July.
GBPINR
The GBP dropped as investors sought fresh insights on the Bank of England’s (BoE) interest rate strategy. The BoE cut its main interest rate by 25 bps in early August, with expectations of another 41 bps reduction by year-end. UK Prime Minister Keir Starmer commented on the lengthy process required to rebuild the British economy.
JPYINR
The JPY remained under pressure following cautious remarks from a Bank of Japan (BoJ) official. The US Dollar rebounded amid a risk-off sentiment, although gains were capped by expectations of dovish Federal Reserve policy. Japan’s National Consumer Price Index (CPI) increased by 2.8% year-on-year in July.
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